Secretarial Audit a system to check the overall compliance of Laws, Rules, Regulations, Circulars, Notifications etc, which are applicable on an Organization. Secretarial Audit ensure that the proper compliance system are in order.
Why Secretarial Audit is Important?
To Protect the interest of the stakeholders of the Company
To avoid the fine, Penalties, Legal actions against the Company.
SCOPE OF SECRETARIAL AUDIT
> CA, 2013
> SCRA, 1956
> Depositories Act
> FEMA
> SEBI
> Specified Laws
> SS by ICSI
RELEVANT SECTION
SECTION 204 OF CA, 2013
Audit is Compulsory for the followings
- Every Listed Company
- Every Public Company having paid up share capital of Rs 50 Cr. or More, or
- Every Public Company having turnover of Rs 250 Cr. or More, or
- Every Company having outstanding loan or borrowing from Banks or FIs of Rs. 100 cr. or More
Every Company having outstanding loan or borrowing from Banks or FIs of Rs. 100 cr. or more
Inserted vide MCA Notification dated 03 January, 2020
Applicable in respect of the financial year commencing on or after 1st April 2020.
Explanation: For the purpose of this , it is hereby clarified that the up share capital, Turnover, or outstanding loans or borrowings as the case may be, existing on the latest audited financial statements shall be taken into Account.
WHO CONDUCT THE SECRETARIAL AUDIT
A Practicing Company Secretary (PCS) shall conduct the Secretarial Audit
1. A Practicing Company Secretary will ensure that all proper compliance system are in order.
2. He ensures that all the legal and procedural requirements of Law and regulations are being met with.
3. If he finds any fault he can point out to the management and they can rectify their mistakes,
4. Secretarial Audit is a continue process.
APPOINTMENT OF SECRETARIAL AUDITOR
Rule 8 of Companies (Meetings of Board and its Powers) Rules, 2014
Secretarial Auditor is required to be appointed by means of resolution passed at Board Meeting and resolution shall be filed with ROC within 30 days in form MGT-14.
SECRETARIAL AUDIT REPORT
As per Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the format of the Secretarial Audit report shall be in Form No. MR-3
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED … … …
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]
To,
The Members,
……….… Limited
I/We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by……. (Name of the company).(hereinafter called the company). Secretarial Audit was conducted in a manner that provided me/us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my Opinion thereon. Based on my/our verification of the…..………………………….. (Name of the company’s) books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I/We hereby report that in my/our opinion, the company has, during the audit period covering the financial year ended on _____, _____ complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
I/we have examined the books, papers, minute books, forms and returns filed and other records maintained by ………….. (“The Company”) for the financial year ended on __, ______ according to the provisions of:
(i) The Companies Act, 2013 (the Act) and the rules made there under;.
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there under;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws Framed there under
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial borrowings
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
(vi)…………………………………………………….. (Mention the other laws as may be applicable specifically to the company)
I/we have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with ….. Stock Exchange(s), if applicable;
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:
I/we further report that
The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.
I/we further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.
I/we further report that during the audit period the company has ………………………..
(Give details of specific events / actions having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above).
For example:
(i) Public/Right/Preferential issue of shares / debentures/sweat Equity, etc
(ii) Redemption / buy-back of securities
(iii) Major decisions taken by the members in pursuance to section 180 of the Companies Act, 2013
(iv) Merger / amalgamation / reconstruction, etc.
(v) Foreign technical collaborations
Place
Date:
Signature::
Name of Company Secretary in practice / Firm:
ACS/FCS No.
CP No.
Author Bio
Going by anyone’s past experience, and more so, by wisdom gathered / left to be so done, this is to be lauded as a commendable initiative / an essential move in the right direction. Significantly such a move, outstanding for long, stands out as a good self- regulatory initiative; for way forward (akin to ‘PEER review/Audit- ICAI) . One or more of such ideas, if exploited to the hilt, with sincerity of purpose, – with a co-ordinated action, by all the concerned professionals, including lawyers, in practice, there is hope for a desirable improvement in the realm of compliance with the mind boggling bundle of ‘statutes’- both of the Centre and the States. It is the often missed out fact of inevitable ‘inter play’ of such statutes that causes difficulties in implementation and enforcement. The reason is that has thus far been left entirely to the Government/ its empowered executive authorities, despite all odds / inherent limitations in their functions.
OPEN-Invite to- expertly share independent views !
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